AMERICAN FOOTWEAR

Hokitika Guardian, 25 July 1931, Page 6

AMERICAN FOOTWEAR

ASSESSMENT OF DUTY,

Discount not deductible.

Discount allowed by an American footwear manufacturer to the Saracen Shoe Co., Ltd, Wellington, was held by Mr Justice Heed, in a reserved, jaugment delivered on questions raised ijy an originating-summons, not to be prop ny deductible for the purpose of assessing the ad valorem duty payable to the Customs Department on the goods. The Saracen Shoe Co., Ltd., imports a certain brand of footwear from the Mishawaka Co. of America, and has the exclusive right of sale in New Zealand. In the United States the Mishawaka Co., sells 90 per cent, of its output to retailers, and the remaining 10 per cent., is sold to a wholesaler or “jobber” named Dunhem Bros., Co., to which firm it allows 14 per cent- trade discount off the price fixed by it from time to time as being the price to be charged to retail dealers throughout the United States. Quantity discounts are allowed to retailers, calculated on 12 monthly periods, varying from o per cent, on 3000 dollars worth of footwear purchased, to 10 per cent, on 10,00 dollars worth or over. The Mishawaka Co. allows the Saracen Shoe Co. the same trade discount as allowed to Dunhem Bros., Co., that is, 14 per cent, off the price charged to retailers in the United States. The New Zealand Customs authorities contended that,* nothwithstanding the price so charged, the ad valorem duty must he calculated as if the price paid tor the goods was at the rate charged to retailers in the home market.

The sole question for determination said His Honour, was whether or not, by virtue of section 114 of the Customs Act, 1913, and its amendments, the Collector of Customs is justified in 'refusing to allow the deduction of 14 per cent, in assessing the ad valorem duty. His Honour said he thought it was the price charged to retailers that constituted the fair market, or current domestic value. The special allowance of 14 per cent, on such retail prices, made t ' the c'mpa-y, rare, he thought, wit in sub-section 2of section 114, v, hUh provided, inter ala:—‘No deduc.ti n of any kind shall be allowed from the current domestic va’ue of such goods because of any special . . .

discount, or because of any special arrangement concern ng the export of the goods, or the exclusive right to the sale thereof with in certain territorial limits or on account of any other consideration by which a special reduction in price has be.n, or might be, allowed.” C ontinuing bis Honour said that plaintiff’s counsel had b; .1 iiis case on there being two markets: one for “jobbers” and one for retai’ers, and had submitetd tha tthe princpal market qualitatively, although rdnutteclly pot quantitatively, was the jobber’s and that accordingly the price charged to jobbers was the “value” within the section. But there was no regular price charged to “johers,” and, therefore, it could not be rightly said that there was any established market value of goods where a “jollier” was the purchaser. The definition of “market value” adopted by the Supreme Court of the United States is two eases was helpful. It was as follows:—“The market va’ue of go* ds is the price at which the owner of the goods, or the producer, hold them for sale; the price at- which they are freely offered in the market to all the world; such prices as dealers in ihe goods are willing to receive, and purchasers are made to pay, when the goods are bought nrd sold in the ordinary course of trade.” The information placed before tlie Court as to the conditions of trade with jobbers did not show, said his Honour, any market within that secs tion.

In his Honour’s opinion. on the true construction of section 114, the discount of 14 per cent, was not to be deducted from the price charged bv the mnnuifncturer To the retail dealer in order to ascertain the “fair market vnme” before essessing Customs dutv on the importation of tli e goods in question.

At the harinp- M r F. C. Fnr-tt. wi+h Mr L, K. Wilson, appeared for the Snmcen Shoe Co.. Ttd., and the SolimC\f r A Fair, K C.) for the Minister of Customs.